Direct Tax Acts, Finance Act 2018

Schedule 24Relief from Income Tax and Corporation Tax by means of credit in respect of Foreign Tax
ITA67 Sch10; F(MP)A68 s3(2) and Sch PtI; F(No. 2)A70 s1(c); FA74 s86 and Sch2 PtI; CTA76 s23(2) to (4) and s166 and Sch4 PtsI and II; FA95 s60; FA98 s60; FA99 s81; FA00 s71; FA01 s41; FA02 s38 and s57; FA04 s31, s89 and Sch3; FA06 s63; FA07 s35, s36(1)(b) and Sch 2; FA08 s43(1)(f), s49; F(No. 2)A08 s33(h); FA10 s3(2), s41(2), s46(1) and s47(1); FA11 s3(1)(n) and s35(1); FA12 s49(1), s52(1), s54 and Sch1(26), s129 and Sch4 Pt2(g); FA13 s26(1), s105 and Sch 2(1)(l); F(No. 2)A13 s28, s40(1); FA15 s88(1)(c); F(TA)A15 s41(11)

Sections 826 and 833

[PART 1

Interpretation

1.

(1) In this Schedule, except where the context otherwise requires]1

[“aggregate income for the tax year” has the same meaning as in section 531AL;

“aggregate of the tax value of the reduction” means the income tax value of the amount by which all income for which credit is to be allowed for foreign tax is treated as reduced in accordance with subparagraph (3)(c) of paragraph 7 ascertained by subtracting the income tax that is chargeable in respect of the year of assessment from the income tax that would be chargeable if all income for which credit is to be allowed for foreign tax had not been reduced in accordance with subparagraph (3)(c) of paragraph 7;]2

arrangements” means arrangements for the time being in force by virtue of [section 826(1)]4[…]3

[“the Irish taxes” means income tax, income levy, universal social charge and corporation tax;]5

[“EEA Agreement” means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by the Protocol signed at Brussels on 17 March 1993;

EEA State” means a state which is a contracting party to the EEA Agreement;]6

[“foreign tax” means-

(a) in the case of any territory in relation to which arrangements have the force of law, any tax chargeable under the laws of that territory for which credit may be allowed under the arrangements, and

(b) in any other case, any tax chargeable in respect of which credit may be allowed by virtue of subparagraph (3) of paragraph 9A.]7

[“relevant Member State” means—

(i) a Member State of the European Communities, or

(ii) not being such a Member State, an EEA State which is a territory with the government of which arrangements having the force of law by virtue of [section 826(1)]9 have been made;]8

(2) Any reference in this Schedule to foreign tax shall be construed, in relation to credit to be allowed under any arrangements, as a reference only to tax chargeable under the laws of the territory in relation to which the arrangements are made.

Amendments

1 Substituted by FA98 s60

2 Inserted by FA13 s26(1)(a) and having effect as if they had come into operation for the year of assessment (within the meaning of section 2 of the Taxes Consolidation Act 1997) 2011 and each subsequent year of assessment

3 Deleted by FA98 s48 and Sch 3

4 Substituted by FA07 s35 and Sch2 with effect as on and from the date of passing of FA07 - 2 April 2007

5 Substituted by FA11 s3(1)(n) and applying for the year of assessment 2011 and each subsequent year of assessment

6,8 Inserted by FA02 s38(a) with effect from 1 January 2002

7 Substituted by FA98 s60

9 Substituted by FA07 s35 and Sch2 with effect as on and from the date of passing of FA07 - 2 April 2007

Revenue Guidance

Credit through PAYE system for non-refundable foreign tax – eBrief No. 119/15

Case Law

Bowater Paper Corporation v Murgatroyd. 46 TC 52

Holding company registered in third state and having branch in Germany with Holding company having subsidiaries established in member states and third states. Dividends paid by foreign subsidiaries were exempt from tax pursuant to terms of double taxation convention – and holding company requested tax paid by foreign subsidiaries be set off against German corporation tax and whether German law compatible with principle of free movement of capital – Kronos International Inc v Finanzamt Leverkusen (Case C-47/12)

A taxpayer received pension set up by World Bank and whether pension scheme ‘established in’ US – Macklin v Revenue and Customs Commissioners [2015] UKUT 39 (TCC)

Taxpayer’s share of profits of US limited liability company taxed in US on basis company was partnership and the balance of profits remitted to UK which was subject to UK income tax and whether UK and US tax charged on same profits or income such that taxpayer entitled to relief. – Revenue and Customs Commissioners v Anson [2015] UKSC 44

Overseas company paid dividend to related UK company with companies entering into arrangements to enhance double taxation relief and whether arrangements effective – Peninsular & Oriental Steam Navigation Company v Revenue and Customs Commissioners [2015] UKUT 312 (TCC)

Employment agency provided temporary employees to clients and brought about schemes entitling employed temps to allowances for travel and subsistence costs incurred travelling to work at clients' premises and whether payments to employed temps reimbursing the temps’ travel expenses in addition to paying their wages – Reed Employment plc and others v Revenue and Customs Commissioners [2015] EWCA Civ 805

Taxpayer was a UK-resident parent of Hong Kong subsidiary and entered into series of transactions by which HK subsidiary received dividend from its subsidiary and paid dividend to taxpayer and whether taxpayer entitled to double taxation relief for underlying tax – Next Brand Ltd v Revenue and Customs Commissioners [2015] SFTD 606

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Sections referred to in text

section 531AL [Definitions (Part 18D - Universal Social Charges)]

section 826 [Agreements for relief from double taxation]

section 833 [Convention with United States of America]

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

General

2.

(1) Subject to this Schedule, where under the arrangements credit is to be allowed against any of the Irish taxes chargeable in respect of any income, the amount of the Irish taxes so chargeable shall be reduced by the amount of the credit.

(2) In the case of any income within the charge to corporation tax, the credit shall be applied in reducing the corporation tax chargeable in respect of that income.

[(2A) In the case of any income within the charge to income tax, the credit shall be applied first in reducing the income tax chargeable in respect of that income.]1

(3) Nothing in this paragraph shall authorise the allowance of credit against any Irish tax against which credit is not allowable under the arrangements.

Amendments

1 Inserted by FA13 s26(1)(b) and having effect as if it had come into operation for the year of assessment (within the meaning of section 2 of the Taxes Consolidation Act 1997) 2011 and each subsequent year of assessment

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

Requirements as to residence

3.

[Subject to paragraphs 9A, 9B and 9C, credit shall not be allowed]1 against income tax for any year of assessment or corporation tax for any accounting period unless the person in respect of whose income the tax is chargeable is resident in the State for that year or accounting period.

Amendments

1 Substituted by FA01 s41 and applying as respects accounting periods ending on or after 15 February 2001

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

Limit on total credit - corporation tax

4.

(1) The amount of the credit to be allowed against corporation tax for foreign tax in respect of any income shall not exceed the corporation tax attributable to that income.

(2) For the purposes of this paragraph, the corporation tax attributable to any income or gain (in this subparagraph referred to as “that income” or “that gain”, as the case may be) of a company shall, [subject to subparagraphs (4) and (5)]1, be the corporation tax attributable to so much (in this paragraph referred to as “the relevant income” or “the relevant gain”, as the case may be) of the income or chargeable gains of the company computed in accordance with the Tax Acts and the Capital Gains Tax Acts, as is attributable to that income or that gain, as the case may be.

[(2A) For the purposes of subparagraph (2)[…]2, where credit is to be allowed against corporation tax for [foreign tax in respect of any income of a company (in this subparagraph referred to as ‘that income’), being income (other than income from a trade carried on by the company through a branch or agency in a territory other than the State) which is taken into account]3 in computing the profits or gains of a trade carried on by the company in an accounting period, the relevant income shall be so much of the profits or gains of the trade for that accounting period as is determined by the formula—

where—

P is the amount of the profits or gains of the trade for the accounting period before deducting any amount under paragraph 7(3)(c),

I is the amount of that income for the accounting period before deducting any disbursements or expenses of the trade, and

R is the total amount receivable by the company in the carrying on of the trade in the accounting period.]4

[…]5

(4) Subject to subparagraph (5), the amount of corporation tax attributable to the relevant income or gain shall be treated as equal to such proportion of the amount of that income or gain as corresponds to the rate of corporation tax payable by the company (before any credit for double taxation relief) on its income or chargeable gains for the accounting period in which the income arises or the gain accrues (in this paragraph referred to as “the relevant accounting period”); but, where the corporation tax payable by the company for the relevant accounting period on the relevant income or[gain -

(a) is charged at the rate specified in section 21A, the rate of corporation tax payable by the company on its income and chargeable gains for the relevant accounting period shall be the rate so specified,

[…]7

(c) is to be computed in accordance with section 713(3) or 738(2), the rate of corporation tax payable by the company on its income and chargeable gains for the relevant accounting period shall be treated as the standard rate of income tax,

(d) is to be computed in accordance with section 723(6), the rate of corporation tax payable by the company on its income and chargeable gains for the relevant accounting period shall be treated as 20 per cent,

(e) is reduced by virtue of section 644B [by any fraction]6, the rate of corporation tax payable by the company on its income and chargeable gains for the relevant accounting period shall be treated as reduced by that fraction,]8

for the purposes of computing the corporation tax attributable to that relevant income or gain, as the case may be.

(5) Where in the relevant accounting period there is any deduction to be made for charges on income, expenses of management or other amounts which can be deducted from or set off against or treated as reducing profits of more than one description -

(a) the company shall for the purposes of [this paragraph, [paragraphs 9D, 9DB and 9DC]10]9 and[…]11allocate every such deduction in such amounts and to such of its profits for that period as it thinks fit, and

(b) (i) the amount of the relevant income or gain shall be treated for the purposes of subparagraph (4),

[…]12

[(iv) the amount of income of a company treated for the purposes of paragraph 9D as referable to an amount of relevant interest (within the meaning of that paragraph)]13 [shall be treated for the purposes of that paragraph]14 [, [...]16]15

[(v) the amount of income of a company treated for the purposes of paragraph 9DB as referable to an amount of relevant royalties (within the meaning of that paragraph) [shall be treated for the purposes of that paragraph]17,]18 [and]19

[(vi) the amount of income of a company treated for the purposes of paragraph 9DC as referable to an amount of relevant leasing income (within the meaning of that paragraph) [shall be treated for the purposes of that paragraph]20,]21

as reduced or, as the case may be, extinguished by so much (if any) of the deduction as is allocated to it.

[(6) (a) The provisions of subparagraph (5), in relation to the allocation of deductions, shall not apply to relevant trading charges on income.

(b) For the purposes of clause (a)relevant trading charges on income” has the same meaning as in section 243A.]22

Amendments

1 Substituted by FA12 s54 and Sch1(26)(a) and is deemed to have come into force and takes effect on and from 1 January 2012

2 Deleted by FA12 s54 and Sch1(26)(b) and is deemed to have come into force and takes effect on and from 1 January 2012

3 Substituted by FA08 s49(1)(a) the following note applies

(i) Subject to subparagraph (ii), subsection (1)(a) FA08 s49 applies as on and from 31 January 2008.

(ii) Subsection (1)(a) shall be deemed to have applied as respects any company as on and from 1 January 2006, if an election in writing is made by the company to the Revenue Commissioners to that effect.

4 Inserted by FA06 s63 with effect from January 2006

5 Deleted by FA12 s54 and Sch1(26)(c) and is deemed to have come into force and takes effect on and from 1 January 2012

6 Inserted by FA01 s41 and applying as respects accounting periods ending on or after 15 February 2001

7 Deleted by FA12 s54 and Sch1(26)(d) and is deemed to have come into force and takes effect on and from 1 January 2012

8 Substituted by FA00 s71 applying as respects accounting periods ending on or after 1 January 2000. The section goes on to provide that “...where an accounting period of a company begins before 1 January 2000 and ends on or after that day, it shall be divided into two parts, one beginning on the day on which the accounting period begins and ending on 31 December 1999 and the other beginning on 1 January 2000 and ending on the day on which the accounting period ends, and both parts shall be treated for the purposes of this section as if they were separate accounting periods of the company.

9 Substituted by FA02 s57(a)

10 Substituted by FA12 s52(1)(a) applying in respect of leasing income (within the meaning of paragraph 9DC(1)(a) (inserted by subsection (1) of FA12 s52) of Schedule 24 to the Taxes Consolidation Act 1997) received on or after 1 January 2012

11 Deleted by FA12 s54 and Sch1(26)(e) and is deemed to have come into force and takes effect on and from 1 January 2012

12 Deleted by FA12 s54 and Sch1(26)(f) and is deemed to have come into force and takes effect on and from 1 January 2012

13 Inserted by FA02 s57(a)

14,17,20 Inserted by FA13 s105 and Sch2(1)(l) and having effect on and from the passing of Finance Act 2013 – 27 March 2013

15 Inserted by FA10 s46(1)(b)(ii) and applying in respect of royalties received on or after 1 January 2010

16 Deleted by FA12 s52(1)(b) applying in respect of leasing income (within the meaning of paragraph 9DC(1)(a) of Schedule 24 to the Taxes Consolidation Act 1997) received on or after 1 January 2012

18 Inserted by FA10 s46(1)(c) and applying in respect of royalties received on or after 1 January 2010

19,21 Inserted by FA12 s52(1)(b) applying in respect of leasing income (within the meaning of paragraph 9DC(1)(a) (inserted by subsection (1) of FA12 s52) of Schedule 24 to the Taxes Consolidation Act 1997) received on or after 1 January 2012

22 Inserted by FA11 s35(1) having effect—

(a) for an accounting period of a company for which the return under section 951 of the Taxes Consolidation Act for the purposes of corporation tax is made by the company on or after 7 December 2010, and

(b) for any other accounting period, in relation to any claim to repayment of, or reduction of liability to, corporation tax for that accounting period where such claim is made on or after 7 December 2010.

Revenue Guidance

Corporation Tax – Foreign Branch Double Taxation Relief - eBrief No. 48/14

Double Taxation Relief for Individuals subject to the High Earners Restriction - eBrief No. 75/14

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Key Provisions for Companies: Finance (No. 2) Act 2013, Mark Berry, Irish Tax Review, Issue 1, 2014.

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

Limit on total credit - income tax

5.

(1) The amount of the credit to be allowed against income tax for foreign tax in respect of any income shall not exceed the sum which would be produced by computing the amount of that income in accordance with the Income Tax Acts, and then charging it to income tax for the year of assessment for which the credit is to be allowed, but at a rate (in this paragraph referred to as “the specified rate”) ascertained by dividing the income tax payable by that person for that year by the amount of the total income of that person for that year.

(2) For the purpose of determining the specified rate, the tax payable by any person for any year shall be computed without any reduction of that tax for any credit allowed or to be allowed under any arrangements having effect by virtue of [section 826(1)]1 but shall be deemed to be reduced by any tax which the person in question is entitled to charge against any other person, and the total income of any person shall be deemed to be reduced by the amount of any income the income tax on which that person is entitled to charge as against any other person.

(3) Where credit for foreign tax is to be allowed in respect of any income and any relief would but for this subparagraph be allowed in respect of that income under section 830, that relief shall not be allowed.

[(4) Where Chapter 2A of Part 15 applies to a person for a tax year, the specified rate shall be ascertained by dividing the income tax payable by that person for that year in accordance with section 485E by the amount of the individual’s adjusted income, within the meaning of section 485C, for that year.]2

Amendments

1 Substituted by FA07 s35 and Sch2 with effect as on and from the date of passing of FA07 - 2 April 2007

2 Inserted by F(No. 2)A13 s28(1)(a) and applying as respects any relief, deduction, credit in relation to tax or, as the case may be, a reduction in the amount of tax payable, details of which fail to be included in particulars on a return, required to be delivered under section 951 [or Part 41A]* of the Taxes Consolidation Act 1997, which was delivered on or after 31 January 2008

* Inserted by FA14 s97 and Sch3(7) and deemed to have come into operation on and from 18 December 2013

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Sections referred to in text

section 485C [Interpretation (Chapter 2A)]

section 485E [Recalculation of taxable income for purposes of limiting reliefs]

Chapter 2A of Part 15 [Limitation on amount of certain reliefs used by certain high income individuals]

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

[Limit on total credit — universal social charge

5A.

(1) The amount of the credit to be allowed against universal social charge for foreign tax in respect of any income—

(a) shall not exceed the sum which would be produced by computing the amount of that income in accordance with Part 18D, and then charging it to universal social charge for the year of assessment for which the credit is to be allowed, but at a rate ascertained by dividing the universal social charge payable by that person for that year by the amount of the aggregate income for the tax year of that person, and

(b) shall be determined (subject to clause (a)) by the formula—

(FT - C) - TV

where—

FT is the foreign tax, including foreign tax not chargeable directly, in respect of the income,

C is the credit allowed against income tax for foreign tax in respect of the income, and

TV is the portion of the aggregate of the tax value of the reduction attributable to the income determined by the formula—

where—

A is the aggregate of the tax value of the reduction,

B is the part of the foreign tax by which the income has been reduced in accordance with subparagraph (3)(c) of paragraph 7, and

C is the aggregate of the reductions by which all income for which credit is to be allowed for foreign tax has been reduced in accordance with subparagraph (3)(c) of paragraph 7.

(2) Subject to subparagraph (1), where an individual is assessed to tax in accordance with section 1017 or 1031C and each spouse or civil partner falls to be charged to universal social charge on his or her share of that income, the amount of the credit to be allowed against universal social charge in respect of each share of that income shall not exceed such part of the credit as bears to that credit the same proportion as the share of each spouse or civil partner in that income bears to that income.]1

Amendments

1 Inserted by FA13 s26(1)(c) and having effect as if it had come into operation for the year of assessment (within the meaning of section 2 of the Taxes Consolidation Act 1997) 2011 and each subsequent year of assessment

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Sections referred to in text

section 1017 [Assessment of husband in respect of income of both spouses]

section 1031C [Assessment of nominated civil partner in respect of income of both civil partners]

Part 18D [Universal Social Charge]

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

6.

Without prejudice to paragraph 5, the total credit to be allowed to a person against income tax for any year of assessment shall not exceed the total income tax payable by the person in question for that year of assessment, less any tax which that person is entitled to charge against any other person.

Effect on computation of income of allowance of credit

7.

(1) Where credit for foreign tax is to be allowed against any of the Irish taxes in respect of any income, this paragraph shall apply in relation to the computation for the purposes of income tax or corporation tax of the amount of that income.

(2) Where the income tax or corporation tax payable depends on the amount received in the State, that amount shall be treated as increased by the amount of the credit allowable against income tax or corporation tax, as the case may be.

(3) Where subparagraph (2) does not apply -

(a) no deduction shall be made for foreign tax (whether in respect of the same or any other income), and

(b) where the income includes a dividend and under the arrangements foreign tax not chargeable directly or by deduction in respect of the dividend is to be taken into account in considering whether any, and if so what, credit is to be allowed against the Irish taxes in respect of the dividend, the amount of the income shall be treated as increased by the amount of the foreign tax not so chargeable which is to be taken into account in computing the amount of the credit, but

[(c) notwithstanding anything in clauses (a) and (b), where any part of the foreign tax in respect of the income (including any foreign tax which under clause (b) is to be treated as increasing the amount of the income) cannot be allowed as a credit against either income tax or corporation tax, the amount of the income shall be treated as reduced by that part of that foreign tax, but, for the purposes of corporation tax, the amount by which the income is treated as reduced by that part of the foreign tax shall not exceed the amount of income which would be the amount referred to in paragraph 4 as “the relevant income”, taking account of the provisions of subparagraphs (2) and (2A) of that paragraph.]1

(4) In relation to the computation of the [total income or the adjusted income, as the case may be,]2 of a person for the purpose of determining the rate mentioned in paragraph 5, subparagraphs (1) to (3) shall apply subject to the following modifications:

(a) for the reference in subparagraph (2) to the amount of the credit allowable against income tax there shall be substituted a reference to the amount of the foreign tax in respect of the income (in the case of a dividend, foreign tax not chargeable directly or by deduction in respect of the dividend being disregarded), and

(b) clauses (b) and (c) of subparagraph (3) shall not apply,

and, subject to those modifications, shall apply in relation to all income in the case of which credit is to be allowed for foreign tax under any arrangements.

Amendments

1 Substituted by F(No. 2)A13 s28(1)(b)(i) and applying as respects accounting periods beginning on or after 1 January 2014

2 Substituted by F(No. 2)A13 s28(1)(b)(ii) and applying as respects any relief, deduction, credit in relation to tax or, as the case may be, a reduction in the amount of tax payable, details of which fall to be included in particulars on a return, required to be delivered under section 951 [or Part 41A]* of the Taxes Consolidation Act 1997, which was delivered on or after 31 January 2008

* Inserted by FA14 s97 and Sch3(7) and deemed to have come into operation on and from 18 December 2013

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

[Effect on computation of income of allowance of credit against universal social charge

7A.

(1) Where credit for foreign tax is to be allowed against any of the Irish taxes in respect of any income, this paragraph shall apply in relation to the computation for the purposes of universal social charge of the amount of that income.

(2) Where the universal social charge payable depends on the amount received in the State, that amount shall be treated as increased by the amount of the credit allowable against income tax.

(3) Where subparagraph (2) does not apply—

(a) no deduction shall be made for foreign tax (whether in respect of the same or any other income), and

(b) where the income includes a dividend and under the arrangements foreign tax not chargeable directly or by deduction in respect of the dividend is to be taken into account in considering whether any, and if so what, credit is to be allowed against the Irish taxes in respect of the dividend, the amount of the income shall be treated as increased by the amount of the foreign tax not so chargeable which is to be taken into account in computing the amount of the credit.

(4) In relation to the computation of the income of a person for the purposes of paragraph 5A, subparagraphs (1) to (3) shall apply in relation to all income in the case of which credit is to be allowed for foreign tax under any arrangements.]1

Amendments

1 Inserted by FA13 s26(1)(e) and having effect as if it had come into operation for the year of assessment (within the meaning of section 2 of the Taxes Consolidation Act 1997) 2011 and each subsequent year of assessment

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

Special provisions as to dividends

8.

(1) For the purposes of this paragraph, the relevant profits shall be -

(a) if the dividend is paid for a specified period, the profits of that period,

(b) if the dividend is not paid for a specified period but is paid out of specified profits, those profits, or

(c) if the dividend is paid neither for a specified period nor out of specified profits, the profits of the last period for which accounts of the body corporate were made up which ended before the dividend became payable;

but if, in a case within clause (a) or (c), the total dividend exceeds the profits available for distribution of the period mentioned in clause (a) or (c), as the case may be, the relevant profits shall be the profits of that period together with so much of the profits available for distribution of preceding periods (other than profits previously distributed or previously treated as relevant for the purposes of this paragraph) as is equal to the excess, and for this purpose the profits of the most recent preceding period shall first be taken into account, then the profits of the next most recent preceding period, and so on.

(2) Where, in the case of any dividend, foreign tax not chargeable directly or by deduction in respect of the dividend is under the arrangements to be taken into account in considering whether any, and if so what, credit is to be allowed against the Irish taxes in respect of the dividend, the foreign tax not so chargeable to be taken into account shall be that borne by the body corporate paying the dividend on the relevant profits in so far as it is properly attributable to the proportion of the relevant profits represented by the dividend.

9.

Where -

(a) the arrangements provide, in relation to dividends of some classes but not in relation to dividends of other classes, that foreign tax not chargeable directly or by deduction in respect of dividends is to be taken into account in considering whether any, and if so what, credit is to be allowed against the Irish taxes in respect of the dividends, and

(b) a dividend is paid which is not of a class in relation to which the arrangements so provide,

then, if the dividend is paid to a company which controls, directly or indirectly, not less than 50 per cent of the voting power in the company paying the dividend, credit shall be allowed as if the dividend were a dividend of a class in relation to which the arrangements so provide.

[PART 2

Unilateral Relief

9A.

(1) To the extent appearing from the following provisions of this paragraph, relief (in this paragraph referred to as “unilateral relief”) from corporation tax in respect of profits represented by dividends shall be given in respect of tax payable under the law of any territory other than the State by allowing that tax as a credit against corporation tax, notwithstanding that there are not for the time being in force any arrangements providing for such relief.

(2) Unilateral relief shall be such relief as would fall to be given under this Schedule if arrangements with the government of the territory in question containing the provisions in subparagraphs (3) to (5) were in force, and a reference in this Schedule to credit under arrangements shall be construed as [including]2 a reference to unilateral relief.

(3) Subject to Part 1 and to [subparagraphs (3B) and (5)]3, credit for tax paid under the law of a territory other than the State in relation to a relevant dividend paid by a company resident in the territory to a [company falling within subparagraph (3A)]4, shall be allowed against corporation tax attributable to the profits represented by the dividend.

[(3A) (a) A company falls within this subparagraph if-

(i) it is resident in the State, or

(ii) it is, by virtue of the law of a [relevant Member State]6 other than the State, resident for the purposes of tax in such a Member State and the dividend referred to in subparagraph (3) forms part of the profits of a branch or agency of the company in the State.

(b) For the purposes of subparagraph (a)(ii), “tax”, in relation to a [relevant Member State]6 other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State.]5

[(3B) Where a payment is made under the law of a territory other than the State to any person by reference to tax paid under the law of a territory other than the State in relation to a relevant dividend paid by a company, then the amount of the credit to be allowed under subparagraph (3) against corporation tax attributable to the profits represented by the dividend shall be reduced by an amount equal to the amount of the payment.]7

(4) For the purposes of [subparagraphs (3) and (3B)]8 -

(a)tax paid under the law of a territory other than the State in relation to a relevant dividend paid by a company” means-

(i) tax which is directly charged on the dividend, whether by charge to tax, deduction of tax at source or otherwise, and the whole of which tax neither the company nor the recipient would have borne if the dividend had not been paid, and

(ii) tax paid in respect of its profits under the law of the territory by the company paying the dividend in so far as that tax is properly attributable to the proportion of the profits represented by the dividend,

(b)relevant dividend” means a dividend paid by a company resident in a territory other than the State to a [company falling within subparagraph (3A)]9, which either directly or indirectly owns, or is a subsidiary of a company which directly or indirectly owns, not less than [5 per cent]10 of the ordinary share capital of the company paying the dividend; for the purposes of this subparagraph one company is a subsidiary of another company if the other company owns, directly or indirectly, not less than 50 per cent of the ordinary share capital of the first company.

(5) Credit shall not be allowed by virtue of subparagraph (3)-

(a) for tax paid under the law of a territory where there are arrangements with the government of the territory [ except[…]11 to the extent that credit may not be given for that tax under those arrangements]12,

(b) for any tax which is relevant foreign tax within the meaning of [[…]14 paragraph 9D]13, or

(c) for any tax in respect of which credit may be allowed under section 831.

(6) Where-

(a) unilateral relief may be given in respect of a dividend, and

(b) it appears that the assessment to corporation tax made in respect of the dividends is not made in respect of the full amount thereof, or is incorrect having regard to the credit, if any, which falls to be given by way of unilateral relief,

any such assessment may be made or amended as is necessary to ensure that the total amount of the dividend is assessed, and the proper credit, if any, is given in respect thereof.

(7) In this Schedule in its application to unilateral relief, references to tax payable or paid under the law of a territory outside the State include only references to taxes which are charged on income or capital gains and which correspond to corporation tax and capital gains tax.

Dividends Paid Between Related Companies: Relief for Irish and Third Country Taxes

9B.

(1) Where a foreign company pays a dividend to [a company falling within subparagraph (1A) (in this paragraph referred to as the “relevant company”)]15 and the foreign company is related to [the relevant company]16, then for the purpose of allowing credit under any arrangements against corporation tax in respect of the dividend, there shall, subject to Part 1, be taken into account as if it were tax payable under the law of the territory in which the foreign company is resident-

(a) any income tax or corporation tax payable in the State by the foreign company in respect of its profits, and

(b) any tax which, under the law of any other territory, is payable by the foreign company in respect of its profits.

[(1A)

(a) A company falls within this subparagraph if-

(i) it is resident in the State, or

(ii) it is, by virtue of the law of a [relevant Member State]15 of the European Communities other than the State, resident for the purposes of tax in such a Member State and the dividend referred to in subparagraph (1) forms part of the profits of a branch or agency of the company in the State.

(b) For the purposes of subparagraph (a)(ii), “tax”, in relation to a [relevant Member State]18 other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State.]17

(2) Where the foreign company has received a dividend from a third company and the third company is related to the foreign company and is connected with [the relevant company]19, then, subject to subparagraph (4),[there shall be treated for the purposes of subparagraph (1) as tax paid by the foreign company in respect of its profits-

(a) any underlying tax payable by the third company, and

(b) any tax directly charged on the dividend which neither company would have borne had the dividend not been paid,

to the extent to which it would be taken into account]20 under this Schedule if the dividend had been paid by a foreign company to [a relevant company]21 and arrangements had provided for[underlying tax to be taken into account: and for this purpose there shall, subject to Part 1, be taken into account as if it were tax payable under the law of the territory in which the third company is resident -

(i) any income tax or corporation tax payable in the State by the foreign company in respect of its profits, and

(ii) any tax which, under the law of any other territory, is payable by the foreign company in respect of its profits.]22

(3) Where the third company has received a dividend from a fourth company and the fourth company is related to the third company and is connected with [the relevant company]23, then, subject to subparagraph (4), tax payable by the fourth company [or tax directly charged on the dividend]24 shall similarly be treated for the purposes of subparagraph (2) as tax paid by the third company, and so on for successive companies each of which is related to the one before and is connected with [the relevant company]25.

(4) Subparagraphs (2) and (3) are subject to the following limitations-

(a) no tax shall be taken into account in respect of a dividend paid by [a relevant company]26, except corporation tax payable in the State and any tax for which that company is entitled to credit under this Schedule, and

(b) no tax shall be taken into account in respect of a dividend paid by a foreign company to another such company unless it could have been taken into account under this Schedule had the other company been [a relevant company]27

(5) (a) In this paragraph-

foreign company” means a company resident outside the State;

[…]28

underlying tax”, in relation to a dividend, means tax borne by the company paying the dividend on the relevant profits (within the meaning of paragraph (8)) in so far as it is properly attributable to the proportion of the relevant profits represented by the dividend.

(b) For the purposes of this paragraph-

(i) a company is related to another company if that other company-

(I) [controls]29 directly or indirectly, or

(II) is a subsidiary of a company which [controls]30 directly or indirectly,

not less than [5 per cent]31 of the [voting power]32 of the first-mentioned company,

(ii) one company is a subsidiary of another company if the other company owns, directly or indirectly, not less than 50 per cent of the ordinary share capital of the first-mentioned company, and

(iii) a company is connected with another company if that other company-

(I) [controls]33 directly or indirectly, or

(II) is a subsidiary of a company which [controls]34 directly or indirectly,

not less than [5 per cent]35 of the [voting power]36 of the first-mentioned company.]1

Amendments

1 Inserted by FA98 s60

2 Inserted by FA99 s81

3 Substituted by FA10 s41(2)(a) and applying to income and dividends received on or after 4 February 2010

4 Substituted by FA01 s41 and applying as respects accounting periods ending on or after 15 February 2001

5 Inserted by FA01 s41 and applying as respects accounting periods ending on or after 15 February 2001

6 Substituted by FA02 s38(b) with effect from 1 January 2002. Previously “Member State of the European Communities

7 Inserted by FA10 s41(2)(b) and applying to income and dividends received on or after 4 February 2010

8 Substituted by FA10 s41(2)(c) and applying to income and dividends received on or after 4 February 2010

9 Substituted by FA01 s41 and applying as respects accounting periods ending on or after 15 February 2001

10 Substituted by FA04 s31 and applying subject to Ministerial Order. S.I. No. 551/04 appointed 2 February 2004 as the date of coming into operation

11 Deleted by FA04 s31 and applying subject to Ministerial Order. S.I. No. 551/04 appointed 2 February 2004 as the date of coming into operation

12 Inserted by FA99 s81

13 Substituted by FA02 s57(b)

14 Deleted by FA12 s54 and Schedule 1(26)(g) and is deemed to have come into force and takes effect on and from 1 January 2012

15,16 Substituted by FA01 s41 and applying as respects accounting periods ending on or after 15 February 2001

17 Inserted by FA01 s41 and applying as respects accounting periods ending on or after 15 February 2001

18 Substituted by FA02 s38(c) with effect from 1 January 2002. Previously “Member State of the European Communities

19,23,25,26,27 Substituted by FA01 s41 and applying as respects accounting periods ending on or after 15 February 2001

20 Substituted by FA00 s71 and deemed to have applied as respects accounting periods ending on or after 1 April 1998

21 Substituted by FA06 s63 with effect from 1 January 2006

22 Substituted by FA04 s31 and applying subject to Ministerial Order

24 Inserted by FA00 s71 and deemed to have applied as respects accounting periods ending on or after 1 April 1998.

28 Deleted by FA01 s41 and applying as respects accounting periods ending on or after 15 February 2001

29,30,33,34 Substituted by FA99 s81, formerly “owns

31 Substituted by FA04 s31 and applying subject to Ministerial Order. Previously “25 per cent” – 2 February 2004.

32,36 Substituted by FA99 s81, formerly “ordinary share capital

35 Substituted by FA04 s31 and applying subject to Ministerial Order. Previously “10 per cent” – 2 February 2004.

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

[9C.

(1) In this paragraph-

relevant company” means a company which-

(a) is not resident in the State,

(b) is, by virtue of the law of a [relevant Member State]1 other than the State, resident for the purposes of tax in such a Member State, and

(c) carries on a trade in the State through a branch or agency,

and for the purposes of subparagraph (b) of this definition “tax”, in relation to a [relevant Member State]1 other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State;

relevant tax” means foreign tax paid in respect of the income or chargeable gains of a branch or agency in the State of a relevant company, other than such tax paid in a territory in which the company is liable to tax by reason of domicile, residence, place of management or other similar criterion.

(2) A relevant company shall, as respects an accounting period, be entitled to such relief under this Schedule in respect of relevant tax as would, if the branch or agency in the State had been a company resident in the State, have been given under any arrangements to that company resident in the State.]2

Amendments

1 Substituted by FA02 s38(d) with effect from 1 January 2002. Previously “Member State of the European Communities

2 Inserted by FA01 s41 and applying as respects accounting periods ending on or after 15 February 2001

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

9D.

[(1) (a) In this paragraph—

relevant foreign tax”, in relation to interest receivable by a company, means tax—

(i) which under the laws of any foreign territory has been deducted from the amount of the interest,

(ii) which corresponds to income tax or corporation tax,

(iii) which has not been repaid to the company,

(iv) for which credit is not allowable under arrangements, and

(v) which, apart from this paragraph, is not treated under this Schedule as reducing the amount of income;

[“relevant interest” means interest receivable by a company -

(a) which falls to be taken into account in computing the trading income of a trade carried on by the company, and

(b) from which relevant foreign tax is deducted.]2

(b) For the purposes of this paragraph—

(i) the amount of corporation tax which apart from this paragraph would be payable by a company for an accounting period and which is attributable to an amount of relevant interest shall be an amount equal to—

(I) in so far as it is corporation tax charged on profits which under section 26(3) are apportioned to the financial year 2002, 16 per cent, and

(II) in so far as it is corporation tax charged on profits which under section 26(3) are apportioned to the financial year 2003 or any subsequent financial year, 12.5 per cent,

of the amount of the income of the company referable to the amount of the relevant interest [reduced by the relevant foreign tax]3, and

(ii) the amount of any income of a company referable to an amount of relevant interest in an accounting period shall, subject to paragraph 4(5), be taken to be such sum as bears to the total amount of the trading income of the company for the accounting period [increased by the amount of the relevant foreign tax]4 the same proportion as the amount of relevant interest in the accounting period bears to the total amount receivable by the company in the course of the trade in the accounting period.

(2) Where, as respects an accounting period of a company, the trading income of a trade carried on by the company includes an amount of relevant interest, the amount of corporation tax which, apart from this paragraph, would be payable by the company for the accounting period shall be reduced by so much of—

(a) in so far as it is corporation tax charged on profits which under section 26(3) are apportioned to the financial year 2002, 84 per cent, and

(b) in so far as it is corporation tax charged on profits which under section 26(3) are apportioned to the financial year 2003 or any subsequent financial year, 87.5 per cent,

of any relevant foreign tax borne by the company in respect of relevant interest in that period as does not exceed the corporation tax which would be so payable and which is attributable to the amount of the relevant interest.

[…]5]1

Amendments

1 Inserted by FA02 s57(c)

2 Substituted by FA03 s60 and applying as respects accounting periods ending on or after 6 February*

3,4 Inserted by FA03 s60 and applying as respects accounting periods ending on or after 6 February*

5 Deleted by FA12 s54 and Schedule 1(26)(h) and is deemed to have come into force and takes effect on and from 1 January 2012

* The Act does not specify the year, but the editor presumes it means 6 February 2003.

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

Unilateral Relief (branch profits)

[9DA.

(1) To the extent appearing from the following provisions of this paragraph, relief (in this paragraph referred to as ‘unilateral relief’) from corporation tax in respect of profits of a company from a trade carried on by the company through a branch or agency in a territory other than the State shall be given in respect of tax payable under the law of any territory other than the State by allowing that tax as a credit against corporation tax, notwithstanding that there are not for the time being in force any arrangements providing for such relief.

(2) Unilateral relief shall be such relief as would fall to be given under this Schedule if arrangements with the government of the territory in question containing the provisions in subparagraphs (3) to (5) were in force, and a reference in this Schedule to credit under arrangements shall be construed as including a reference to unilateral relief.

(3) Subject to Part 1 and to subparagraph (5), credit for tax paid under the law of a territory other than the State and computed by reference to income of a company, being a company falling within subparagraph (4), from a trade carried on by it through a branch or agency in that territory shall be allowed against corporation tax in the State computed by reference to that income.

(4) (a) A company falls within this subparagraph if—

(i) it is resident in the State, or

(ii) it is, by virtue of the law of a relevant Member State other than the State, resident for the purposes of tax in such a Member State and the income referred to in subparagraph (3) forms part of the income of a branch or agency of the company in the State.

(b) For the purposes of subparagraph (a)(ii), ‘tax’, in relation to a relevant Member State other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State.

(5) Credit shall not be allowed by virtue of subparagraph (3)

(a) for tax paid under the law of a territory where there are arrangements with the government of the territory except to the extent that credit may not be given for that tax under those arrangements, or

(b) for any tax which is relevant foreign tax within the meaning of []2 paragraph 9D.

(6) Where—

(a) unilateral relief may be given in respect of any profits, and

(b) it appears that the assessment to corporation tax made in respect of the profits is not made in respect of the full amount thereof, or is incorrect having regard to the credit, if any, which falls to be given by way of unilateral relief,

then any such assessment may be made or amended as is necessary to ensure that the total amount of the profits is assessed, and the proper credit, if any, is given in respect thereof.

(7) In this Schedule in its application to unilateral relief, references to tax payable or paid under the law of a territory outside the State include only references to taxes which are charged on income or capital gains and which correspond to corporation tax and capital gains tax.]1

Amendments

1 Inserted by FA07 s36(1)(b)(i) and applying in the case of relief from corporation tax, as respects an accounting period ending on or after 1 January 2007, and in any other case, for the year of assessment 2007 and subsequent years

2 Deleted by FA12 s54 and Schedule 1(26)(i) and is deemed to have come into force and takes effect on and from 1 January 2012

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

Unilateral Relief (royalty income)

[9DB.

(1) (a) In this paragraph—

relevant foreign tax”, in relation to royalties receivable by a company, means tax—

(i) which under the laws of any foreign territory has been deducted from the amount of the royalty,

(ii) which corresponds to income tax or corporation tax,

(iii) which has not been repaid to the company,

(iv) for which credit is not allowable under arrangements, and

(v) which, apart from this paragraph, is not treated under this Schedule as reducing the amount of income;

relevant royalties” means royalties receivable by a company—

(i) which fall to be taken into account in computing the trading income of a trade carried on by the company, and

(ii) from which relevant foreign tax is deducted;

royalties” means payments of any kind as consideration for—

(i) the use of, or the right to use—

(I) any copyright of literary, artistic or scientific work, including cinematograph films and software,

(II) any patent, trade mark, design or model, plan, secret formula or process,

or

(ii) information concerning industrial, commercial or scientific experience.

(b) For the purposes of this paragraph—

(i) the amount of corporation tax which apart from this paragraph would be payable by a company for an accounting period and which is attributable to an amount of relevant royalties shall be an amount equal to 12.5 per cent of the amount by which the amount of the income of the company referable to the amount of the relevant royalties exceeds the relevant foreign tax, and

(ii) the amount of any income of a company referable to an amount of relevant royalties in an accounting period shall, subject to paragraph 4(5), be taken to be such sum as bears to the total amount of the trading income of the company for the accounting period before deducting any relevant foreign tax the same proportion as the amount of relevant royalties in the accounting period bears to the total amount receivable by the company in the course of the trade in the accounting period.

(2) Where, as respects an accounting period of a company, the trading income of a trade carried on by the company includes an amount of relevant royalties, the amount of corporation tax which, apart from this paragraph, would be payable by the company for the accounting period shall be reduced by so much of 87.5 per cent of any relevant foreign tax borne by the company in respect of relevant royalties in that period as does not exceed the corporation tax which would be so payable and which is attributable to the amount of the relevant royalties.

[…]2]1

[(4) Where as respects any relevant royalties received in an accounting period by a company, any part of the foreign tax cannot, due to an insufficiency of income, be treated as reducing income under paragraph 7(3)(c) or under section 77(6B), then the amount which cannot be so treated shall, for the purposes of this paragraph, be unrelieved foreign tax.

(5) Where, as respects an accounting period, a company is in receipt of royalties from persons not resident in the State and such royalties are taken into account in computing the trading income of a trade carried on by the company, the company may—

(a) reduce the income (in this subparagraph referred to as “royalty income”) referable to any such payments by any unrelieved foreign tax, and

(b) allocate such reductions in such amounts and to such of its royalty income for that accounting period as it sees fit.

(6) The aggregate amount of reductions under subparagraph (5) in an accounting period cannot exceed the aggregate of the unrelieved foreign tax in respect of all relevant royalties for that accounting period.]3

Amendments

1 Inserted by FA10 s46(1)(d) and applying in respect of royalties received on or after 1 January 2010

2 Deleted by FA12 s54 and Sch1(26)(j) and is deemed to have come into force and takes effect on and from 1 January 2012

3 Inserted by FA12 s49(1) applying as respects relevant royalties (within the meaning of paragraph 9DB(1)(a) of Schedule 24 of the Taxes Consolidation Act 1997) received on or after 1 January 2012

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Sections referred to in text

section 77 [Miscellaneous special rules for computation of income]

section 442 [Interpretation (Part 14)]

Cross references

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

835G Elimination of double counting

Unilateral Relief (leasing income)

[9DC.

(1) (a) In this paragraph—

“leasing income” means payments of any kind as consideration for the use of, or the right to use, industrial, commercial or scientific equipment;

“relevant foreign tax”, in relation to leasing income receivable by a company, means tax—

(i) which under the laws of any foreign territory has been deducted from the amount of the lease payment,

(ii) which corresponds to income tax or corporation tax,

(iii) which has not been repaid to the company,

(iv) for which credit is not allowable under arrangements, and

(v) which, apart from this paragraph, is not treated under this Schedule as reducing the amount of income;

“relevant leasing income” means leasing income receivable by a company—

(i) which falls to be taken into account in computing the trading income of a trade carried on by the company, and

(ii) from which relevant foreign tax is deducted.

(b) For the purposes of this paragraph—

(i) the amount of corporation tax which apart from this paragraph would be payable by a company for an accounting period and which is attributable to an amount of relevant leasing income shall be an amount equal to 12.5 per cent of the amount by which the amount of the income of the company referable to the amount of the relevant leasing income exceeds the relevant foreign tax, and

(ii) the amount of any income of a company referable to an amount of relevant leasing income in an accounting period shall, subject to paragraph 4(5), be taken to be such sum as bears to the total amount of the trading income of the company for the accounting period before deducting any relevant foreign tax the same proportion as the amount of relevant leasing income in the accounting period bears to the total amount receivable by the company in the course of the trade in the accounting period.

(2) Where, as respects an accounting period of a company, the trading income of a trade carried on by the company includes an amount of relevant leasing income, the amount of corporation tax which, apart from this paragraph, would be payable by the company for the accounting period shall be reduced by so much of 87.5 per cent of any relevant foreign tax borne by the company in respect of relevant leasing income in that period as does not exceed the corporation tax which would be so payable and which is attributable to the amount of the relevant leasing income.]1

[(3) For the purposes of subparagraph (4)

(a) as respects any leasing income included in trading income for an accounting period of a trade carried on by a company, and

(b) taking account of payments for the use of, or the right to use, specific equipment as a separate leasing income,

an amount shall be treated as unrelieved foreign tax, or unrelieved relevant foreign tax, of that accounting period in respect of that leasing income, being—

(i) in the case of foreign tax, which is deducted, or treated as so deducted by subparagraph (4), from that leasing income, the sum of—

(I) so much of that tax as is neither allowed as a credit against corporation tax nor treated as reducing income under paragraph 7(3)(c), and

(II) 87.5 per cent of the amount of foreign tax by which income is treated as reduced by virtue of paragraph 7(3)(c),

and

(ii) in the case of relevant foreign tax, the amount by which 87.5 per cent of that relevant foreign tax, which is deducted, or treated as so deducted by subparagraph (4), from that leasing income, exceeds the amount of corporation tax which is treated as attributable to that leasing income for the purposes of this paragraph.

(4) Where, taking account of payments for the use of, or the right to use, specific equipment as a separate leasing income, a company is in receipt of a leasing income for an accounting period (in this subparagraph referred to as “the first-mentioned accounting period”) from which foreign tax or relevant foreign tax has been deducted, then for the purposes of the Corporation Tax Acts any unrelieved foreign tax, or unrelieved relevant foreign tax, of the accounting period immediately preceding the first-mentioned accounting period in respect of the same leasing income shall be treated as foreign tax or relevant foreign tax, as the case may be, deducted from such leasing income of the first-mentioned accounting period.]2

Amendments

1 Inserted by FA12 s52(1)(c) applying in respect of leasing income (within the meaning of paragraph 9DC(1 (a) of Schedule 24 to the Taxes Consolidation Act 1997) received on or after 1 January 2012

2 Inserted by F(No. 2)A13 s28(1)(c) and applying as respects accounting periods beginning on or after 1 January 2014

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

Treatment of unrelieved foreign tax

[9E.

(1) (a) In this paragraph—

foreign company” means a company resident outside the State;

unrelieved foreign tax” has the meaning assigned to it in subparagraph (2).

unrelieved foreign tax in respect of specified dividends” has the meaning assigned to it in subparagraph (3).

(b) For the purposes of this paragraph—

(i) a dividend is a relevant dividend if it is received by a company (in this clause referred to as the “receiving company”) from a company which is not resident in the State (in this clause referred to as the “paying company”) and the paying company is related to the receiving company (within the meaning of paragraph 9B(5)(b)), and

(ii) the aggregate amount of corporation tax payable by a company for an accounting period in respect of any dividends received by the company in the accounting period from foreign companies means so much of the corporation tax that, apart from this paragraph, would be payable by the company for that accounting period as would not have been payable had those dividends not been received by the company.

(2) (a) Where, as respects a relevant dividend received in an accounting period by a company and which is charged to corporation tax in accordance with section 21A, any part of the foreign tax cannot, apart from this paragraph, be allowed as a credit against any of the Irish taxes and, accordingly, the amount of income representing the dividend is treated under paragraph 7(3)(c) as reduced by that part of the foreign tax, then an amount determined by the formula—

where—

R is the rate per cent specified in section 21A(3), and

D is the amount of the part of the foreign tax by which the income is to be treated under paragraph 7(3)(c) as reduced,

shall be treated for the purposes of clause (b) as unrelieved foreign tax of that accounting period.

(b) The aggregate amount of corporation tax payable by a company for an accounting period in respect of relevant dividends received by the company in that accounting period from foreign companies shall be reduced by the unrelieved foreign tax of that accounting period.

(c) Where the unrelieved foreign tax in relation to an accounting period of a company exceeds the aggregate amount of corporation tax payable by the company for the accounting period in respect of relevant dividends received by the company in that accounting period from foreign companies, the excess shall be carried forward and treated as unrelieved foreign tax of the next succeeding accounting period, and so on for succeeding accounting periods.

(3) (a) In this subparagraph “specified dividend” means a relevant dividend which is not charged to corporation tax in accordance with section 21A.

(b) Where, as respects a specified dividend received in an accounting period by a company, any part of the foreign tax cannot, apart from this paragraph, be allowed as a credit against any of the Irish taxes and, accordingly, the amount of income representing the dividend is treated under paragraph 7(3)(c) as reduced by that part of the foreign tax, then an amount determined by the formula—

where—

R is the rate per cent specified in section 21, and

D is the amount of the part of the foreign tax by which the income is to be treated under paragraph 7(3)(c) as reduced,

shall be treated for the purposes of clause (c) as unrelieved foreign tax in respect of specified dividends of that accounting period.

(c) The aggregate amount of corporation tax payable by a company for an accounting period in respect of specified dividends received by the company in that accounting period from foreign companies shall be reduced by the unrelieved foreign tax in respect of specified dividends of that accounting period.

(d) Where the unrelieved foreign tax in respect of specified dividends in relation to an accounting period of a company exceeds the aggregate amount of corporation tax payable by the company for the accounting period in respect of specified dividends received by the company in that accounting period from foreign companies, the excess shall be carried forward and treated as unrelieved foreign tax in respect of specified dividends of the next succeeding accounting period, and so on for succeeding accounting periods.]1

Amendments

1 Substituted by FA08 s43(1)(f) and shall be deemed to have applied as respects a dividend received on or after 1 January 2007.

Notes on FA08 amendments

FA08 s43(1)(f) amends the rules for pooling of foreign tax relief. In certain cases where a company receives a foreign dividend, the Irish tax on the dividend may be reduced by the foreign tax suffered in relation to that dividend. If there is an excess amount of foreign tax that cannot be set off in this way, the surplus may be pooled and offset against liability on other foreign dividends received by the company. These pooling arrangements are being amended so that in future they will apply separately to dividends that are taxable at the 25% rate and to dividends that are taxable at the 12.5% rate. Any surplus of foreign tax arising on dividends taxable at the 12.5% rate will not be available for offset against tax on dividends taxable at the 25% rate. However, there will not be a similar restriction in the case of dividends taxable at the 25% rate.

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Sections referred to in text

section 21 [The charge to corporation tax and exclusion of income tax and capital gains tax]

section 21A [Higher rate of corporation tax]

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

[9F.

(1) (a) In this paragraph—

the “aggregate amount of corporation tax payable by a company for an accounting period in respect of relevant interest of the company for the accounting period from foreign companies” means so much of the corporation tax which, apart from this paragraph, would be payable by the company for that accounting period as would not have been payable had the interest not been chargeable to tax;

foreign company” means a company resident outside the State;

foreign tax”, in relation to interest receivable by a company, means tax which—

(i) under the laws of any foreign territory has been deducted from the amount of the interest,

(ii) corresponds to income or corporation tax,

(iii) has not been repaid to the company;

unrelieved foreign tax” has the meaning assigned to it in subparagraph (2).

(b) For the purposes of this paragraph—

(i) interest which is receivable by a company (in this clause referred to as the “receiving company”) from a company is relevant interest if—

(I) the interest falls to be taken into account in computing the trading income of a trade carried on by the receiving company,

(II) the interest arises from a source within a territory in regard to which arrangements have the force of law, and

(III) one of those companies is the 25 per cent subsidiary of the other or both companies are 25 per cent subsidiaries of a third company,

(ii) subject to subclause (iii), a company shall be deemed to be a 25 per cent subsidiary of another company if and so long as not less then 25 per cent of its ordinary share capital would be treated as owned directly or indirectly by that other company if section 9 (other than subsection (1) of that section) were to apply for the purposes of this paragraph,

(iii) a company (in this subclause referred to as a “subsidiary company”) shall not be deemed to be a 25 per cent subsidiary of another company (in this subclause referred to as the “parent company”) at any time if the percentage—

(I) of any profits, which are available for distribution to equity holders, of the subsidiary company at such time to which the parent company is beneficially entitled at such time, or

(II) of any assets, which are available for distribution to equity holders on a winding up, of the subsidiary company at such time to which the parent company would be beneficially entitled at such time on a winding up of the subsidiary company,

is less than 25 per cent of such profits or assets (as the case may be) of the subsidiary company at such time, and sections 413, 414, 415 and 418 shall, with any necessary modifications but without regards to section 411(1)(c) in so far as it relates to those sections, apply to the determination of the percentage of those profits or assets (as the case may be) to which a company is beneficially entitled as they apply to the determination for the purposes of Chapter 5 of Part 12 of the percentage of any such profits or assets to which a company is so entitled.

[(c) (i) In this clause “arrangements” means arrangements made with the government of a territory which on completion of the procedures set out in section 826(1) will have the force of law.

(ii) A territory not otherwise within subparagraph (1)(b)(i)(II) shall for the purposes of this paragraph be so treated if it is a territory with the government of which arrangements have been made.]2

(2) Where, as respects any relevant interest received in an accounting period by a company, any part of the foreign tax cannot, apart from this paragraph, be allowed as a credit against corporation tax and, accordingly, the amount of income representing the interest is treated under paragraph 7(3)(c) as reduced by that part of the foreign tax, then an amount determined by the formula—

where—

R is the rate per cent specified in section 21(1), and

D is the amount of the part of the foreign tax by which the income is to be treated under paragraph 7(3)(c) as reduced,

shall be treated for the purposes of subparagraph (3) as unrelieved foreign tax of that accounting period.

(3) The aggregate amount of corporation tax payable by a company for an accounting period in respect of relevant interest of the company for the accounting period from foreign companies shall be reduced by the unrelieved foreign tax of that accounting period.]1

Amendments

1 Inserted by FA06 s63 with effect from 1 January 2006

2 Inserted by F(No. 2)A08 s33(h) and deemed to have come into force and takes effect as on and from 1 January 2009

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

[9FA.

(1) In this paragraph—

aggregate amount of corporation tax payable by a company for an accounting period in respect of foreign branch income of the company for the accounting period” means so much of the corporation tax which, apart from this paragraph, would be payable by the company for that accounting period as would not have been payable had the foreign branch income been disregarded for the purposes of tax;

foreign branch”, in relation to a company, means a branch or agency of the company in a territory other than the State through which the company carries on a trade in that territory;

foreign branch income”, in relation to a company, means so much of the income of the company as is attributable to a foreign branch;

foreign tax”, in relation to foreign branch income of a company, means tax which—

(a) is paid under the laws of the territory in which the foreign branch is situated on income attributable to that branch, and

(b) corresponds to corporation tax.

(2) Where, as respects any foreign branch income of a company for an accounting period, any part of the foreign tax cannot, apart from this paragraph, be allowed as a credit against corporation tax and, accordingly, the amount of the income is treated under paragraph 7(3)(c) as reduced by that part of the foreign tax, then an amount equal to the aggregate of—

(a) where income that is chargeable to tax at the rate specified in section 21(1) for the accounting period is treated under paragraph 7(3)(c) as reduced, an amount determined by the formula—

where—

R is the rate per cent specified in section 21(1), and

D is the amount by which that income is so treated as reduced,

and

(b) where income that is chargeable to tax at the rate specified in section 21A(3) for the accounting period is treated under paragraph 7(3)(c) as reduced, an amount determined by the formula—

where—

R is the rate per cent specified in section 21A(3), and

D is the amount by which that income is so treated as reduced,

shall be treated for the purposes of [subparagraphs (3) and (4)]2 as unrelieved foreign tax of that accounting period.

(3) The aggregate amount of corporation tax payable by a company for an accounting period in respect of foreign branch income of the company for the accounting period shall be reduced by the unrelieved foreign tax of that accounting period.]1

[(4) Where the unrelieved foreign tax of an accounting period of a company exceeds the aggregate amount of corporation tax payable by the company for the accounting period in respect of foreign branch income of the company for that accounting period, the excess shall be carried forward and treated as unrelieved foreign tax of the next succeeding accounting period, and so on for succeeding accounting periods.]3

Amendments

1 Inserted by FA07 s36(1)(b)(ii) and applying in the case of relief from corporation tax, as respects an accounting period ending on or after 1 January 2007, and in any other case, for the year of assessment 2007 and subsequent years

2 Substituted by FA10 s47(1)(a) and applying as respects accounting periods ending on or after 1 January 2010

3 Inserted by FA10 s47(1)(b) and applying as respects accounting periods ending on or after 1 January 2010

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Sections referred to in text

section 21 [The charge to corporation tax and exclusion of income tax and capital gains tax]

section 21A [Higher rate of corporation tax]

Cross references

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

835G Elimination of double counting

Unilateral Relief (capital gains)

[9FB.

(1) To the extent appearing from the following provisions of this paragraph, relief (in this paragraph referred to as “unilateral relief”) from capital gains tax (including corporation tax in respect of chargeable gains) in respect of chargeable gains accruing to a person on the disposal of an asset (in this paragraph referred to as a “specified asset”) which is located in a territory other than the State shall be given in respect of tax payable under the law of any specified territory by allowing that tax as a credit against capital gains tax (or as the case may be corporation tax in respect of chargeable gains), notwithstanding that there are not for the time being in force any arrangements providing for such relief.

(2) Unilateral relief shall be such relief as would fall to be given under this Schedule if arrangements with the government of the specified territory in question contained the provisions in subparagraphs (3) and (4), and a reference in this Schedule to credit under arrangements shall be construed as including a reference to unilateral relief.

(3) Subject to Part 1 and to subparagraph (5), credit for tax paid under the law of a specified territory and computed by reference to a capital gain of a person from the disposal by the person of a specified asset, shall be allowed against capital gains tax (or as the case may be corporation tax in respect of chargeable gains) in the State computed by reference to that capital gain.

(4) Credit shall not be allowed by virtue of subparagraph (3) for tax paid under the law of a specified territory to the extent that credit may be given for that tax under—

(a) arrangements with the government of the territory, or

(b) any other provision of this Schedule.

(5) Where—

(a) unilateral relief may be given in respect of any chargeable gain, and

(b) it appears that any assessment made in respect of the chargeable gain is not made in respect of the full amount thereof, or is incorrect having regard to the credit, if any, which falls to be given by way of unilateral relief,

then any such assessment may be made or amended as is necessary to ensure that the total amount of the chargeable gain is assessed, and the proper credit, if any, is given in respect thereof.

(6) In this Schedule in its application to unilateral relief, references to tax payable or paid under the law of a territory outside the State include only references to taxes which are charged on capital gains and which correspond to income tax, corporation tax or capital gains tax.

(7) In this paragraph “specified territory” means any of the following territories with the government of which arrangements have been made, that is to say, the Kingdom of Belgium, Cyprus, the Republic of France, […]2 the Italian Republic, Japan, the Grand Duchy of Luxembourg, the Kingdom of the Netherlands, Pakistan or Zambia.]1

Amendments

1 Inserted by FA07 s36(1)(b)(ii) and applying in the case of relief from corporation tax, as respects an accounting period ending on or after 1 January 2007, and in any other case, for the year of assessment 2007 and subsequent years

2 Deleted by FA15 s88(1)(c) and having effect on and from the passing of Finance Act 2015 – 21 December 2015

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

Dividends paid by companies that are taxed as a group under the law of a territory outside the State

9G.

(1) This paragraph applies in any case where—

(a) under the law of a territory outside the State, tax is payable by a company (in this paragraph referred to as the “responsible company”) resident in that territory in respect of the aggregate profits, or aggregate profits and aggregate gains, of that company and one or more other companies (in this paragraph referred to as the “consolidated companies”), taken together as a single taxable entity, and

(b) a dividend is paid—

(i) by any one of the consolidated companies (in this paragraph referred to as the “paying company”) to a company that is not one of the consolidated companies (in this paragraph referred to as the “recipient company”), or

(ii) by a company that is not one of the consolidated companies (in this paragraph referred to as the “third company”) to any one of the consolidated companies.

(2) (a) Where this paragraph applies, then for the purposes of allowing credit under this Schedule for foreign tax in respect of profits attributable to dividends this Schedule shall apply with any necessary modifications as if—

(i) the consolidated companies, taken together, were a single company (in this paragraph referred to as the “single company”),

(ii) any dividend paid by any of the consolidated companies to a recipient company was paid by the single company,

(iii) any dividend paid by a third company to any one of the consolidated companies was paid to the single company,

(iv) the single company is related to the recipient company if the paying company is related to the recipient company,

(v) the third company is related to the single company if the third company is related to that one of the consolidated companies to which it paid the dividend, and

(vi) the single company is resident in the territory in which the responsible company is resident,

so that the relevant profits for the purposes of paragraph 8 is a single aggregate figure in respect of the single company and the foreign tax paid by the responsible company is foreign tax paid by the single company.

(b) For the purposes of this paragraph—

(i) a single company that is treated as paying a dividend shall be treated as connected with a relevant company (within the meaning given to it in paragraph 9B) in relation to the dividend if the company that paid the dividend is connected with that relevant company,

(ii) a relevant dividend (within the meaning given to it in paragraph 9A) paid by any one of the consolidated companies to a recipient company will be treated as a relevant dividend paid by the single company to that recipient company,

(iii) references in paragraph 8 to “body corporate” shall include references to a single company within the meaning of this paragraph.]1

Amendments

1 Inserted by FA06 s63 with effect from 1 January 2006

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

Dividends paid out of transferred profits

[9H.

(1) This paragraph applies in any case where—

(a) under the law of a territory outside the State, tax is paid by a company (in this paragraph referred to as the “first company”) resident outside the State in respect of any of its profits,

(b) some or all of those profits become profits of another company (in this paragraph referred to as the “second company”) resident outside the State otherwise than by virtue of the payment of a dividend to the second company, and

(c) the second company pays a dividend out of those profits to another company, wherever resident.

(2) Where this paragraph applies, then for the purposes of allowing credit under this Schedule for foreign tax in respect of profits of the first company attributable to any dividends paid—

(a) by any company (whether or not the second company) resident outside the State,

(b) to a company resident in the State,

this Schedule shall apply with any necessary modifications as if the second company had paid the tax paid by the first company in respect of those profits of the first company which have become profits of the second company in accordance with subparagraph (1)(b).

(3) Subparagraphs (1) and (2) are subject to the following limitations—

(a) the credit against corporation tax allowable to a company resident in the State shall not exceed the amount which would have been allowable to that company had those profits become profits of the second company by virtue of the payment of a dividend by the first company to the second company, and

(b) no tax shall be taken into account in respect of profits referred to in subparagraph (1) where such profits become the profits of the second company by virtue of a scheme or arrangement the purpose or one of the main purposes of which is the avoidance of tax.]1

Amendments

1 Inserted by FA08 s49(1)(b) and applying to dividends paid on or after 31 January 2008.

Notes to FA08 amendments

This amendment introduces a new paragraph to the Schedule, to extend the circumstances under which a double tax relief credit is made available to Irish companies in receipt of dividends from foreign companies. The legislation currently provides that, where a foreign company pays a dividend to another foreign company which then pays a dividend on to an Irish company, the Irish company will be entitled to a credit against Irish tax on the dividend for the foreign tax paid by the first company on the profits out of which the dividend is paid.

Under the amendment, credit relief will also be available when the profits of the first company become profits of the second foreign company other than by way of a dividend, such as, for example, where there is a merger of companies. In future credit relief will be given on a dividend paid by a company following a merger, in respect of the underlying tax paid by its predecessor companies. The relief will be limited, where appropriate, to the amount that would have been due had the profits been transferred instead by way of a dividend, and will not apply where the profits transfer is a result of a tax avoidance scheme.

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

[Dividends: additional credit

9I.

(1) In this paragraph—

“excluded dividend” means a dividend, or any part of a dividend, paid by a source company to a relevant company, in so far as it is paid out of so much, if any, of the relevant profits of a source company, as—

(a) has not been subject to tax, and

(b) has been received, from a company which is connected with the relevant company and is not resident in a relevant Member State—

(i) directly by means of a dividend or other distribution of profits, being profits which have not been subject to tax, or

(ii) indirectly, from the profits mentioned in subclause (i), by the payment of dividends, or the making of other distributions, by one or more companies, without the income or profits represented by any of those dividends or distributions having been subject to tax;

“relevant company”, in relation to a dividend, means a company that—

(a) is resident in the State, or

(b) is, by virtue of the law of a relevant Member State other than the State, resident for the purposes of tax in such a Member State and the dividend forms part of the profits of a branch or agency in the State;

“relevant dividend” means so much of a dividend as is neither—

(a) an excluded dividend, nor

(b) a dividend which, by virtue of section 21B(4)(c), is not to be taken into account in computing income for corporation tax;

“source company” means a company which—

(a) is not resident in the State, and

(b) is, by virtue of the law of a relevant Member State other than the State, resident for the purposes of tax in such a Member State;

“tax”, except in the case of corporation tax in the State, means—

(a) tax imposed in a country other than the State, which corresponds to such corporation tax, and

(b) tax, corresponding to income tax in the State, which is imposed in a country other than the State by deduction from dividends or other distributions of profits,

but,[…]2any tax charged by reference to a dividend or other distribution of profits such that most of the value of that dividend or distribution is exempted from that charge to tax shall be excluded from the meaning of “tax”.

(2) For the purposes of this paragraph, the relevant profits of a source company in relation to a dividend shall be—

(a) if the dividend is paid for a specified period, the profits of that period,

(b) if the dividend is not paid for a specified period but is paid out of specified profits, those profits, or

(c) if the dividend is paid neither for a specified period nor out of specified profits, the profits of the last period for which accounts of the body corporate were made up which ended before the dividend became payable,

but if, in a case within clause (a) or (c), the total dividend exceeds the profits available for distribution of the period mentioned in clause (a) or (c), as the case may be, the relevant profits shall be the profits of that period together with so much of the profits available for distribution of preceding periods (other than profits previously distributed or previously treated as relevant for the purposes of this subparagraph) as is equal to the excess, and for this purpose the profits of the most recent preceding period shall first be taken into account, then the profits of the next most recent preceding period, and so on.

(3) Where a source company pays a relevant dividend to a relevant company then, for the purpose of allowing credit against corporation tax for foreign tax in respect of that dividend, there shall, subject to paragraph 4, and subparagraph (5), be taken into account, as if it were tax payable in respect of that dividend under the law of the territory in which a source company is resident, an amount (referred to in this paragraph as “additional foreign credit”) determined in accordance with subparagraph (4).

(4) The additional foreign credit referred to in subparagraph (3) in respect of a relevant dividend shall be—

(a) where the relevant dividend is subject to corporation tax at the rate specified in section 21(1), an amount determined by the formula—

(A × B) - C

where—

A is the amount of the relevant dividend brought into charge to corporation tax in the State,

B is the lower of—

(i) the rate per cent specified in section 21(1), or

(ii) the rate per cent of tax, which corresponds, in the relevant Member State in which the source company is resident for the purposes of tax, to corporation tax in the State, applicable to the relevant profits in relation to the relevant dividend,

and

C is the amount of the credit for tax against corporation tax attributable to the relevant dividend which, apart from this paragraph, would be allowable under this Schedule,

or

(b) where the relevant dividend is [subject to corporation tax at the rate specified in section 21A(3)(a)]3, the amount determined by the formula—

(A × B) - C

where—

A is the amount of the relevant dividend brought into charge to corporation tax in the State,

B is the lower of—

(i) 25 per cent, or

(ii) the rate per cent of tax, which corresponds, in the relevant Member State in which the source company is resident for the purposes of tax, to corporation tax in the State, applicable to the relevant profits in relation to the relevant dividend,

and

C is the amount of the credit for tax against corporation tax attributable to the relevant dividend which, apart from this paragraph, would be allowable under this Schedule.

[(4A) (a) Where the relevant profits in relation to the relevant dividend referred to in clause (a) or (b) of subparagraph (4) have not been subject to tax, which corresponds to corporation tax in the State, but are attributable to profits of a company which have been subject to such tax, then, for the purposes of subparagraph (4), the rate per cent of tax, which is referred to in clause (a) or (b) of that subparagraph as applicable to the relevant profits in relation to the relevant dividend, shall be deemed to be the rate per cent of tax, which corresponds to corporation tax in the State, applicable to those profits of that company which have been subject to such tax.

(b) For the purposes of clause (a) and subparagraphs (3) and (4)

(i) each part, if any, of a relevant dividend mentioned in clause (a) or (b) of subparagraph (4), being—

(I) an amount (referred to in this subclause as the “directly taxed amount”), which is so much of the relevant dividend as does not exceed the relevant profits in relation to the relevant dividend which have been subject to tax, which corresponds to corporation tax in the State, or

(II) so much of the excess of the relevant profits in relation to the relevant dividend over the directly taxed amount as is attributable to profits of a company which have been subject to tax, which corresponds to corporation tax in the State,

shall be treated as a separate relevant dividend, and

(ii) the aggregate value of the parts of the relevant dividend so treated under subclause (i) shall not exceed the value of that relevant dividend.

(c) For the purposes of this subparagraph—

(i) profits of a company are attributable to the profits of another company if they have been received directly or indirectly by the payment of dividends or the making of distributions by one or more companies directly or indirectly from the profits of that other company, and

(ii) relevant profits in relation to a relevant dividend shall not be attributable to the same profits of a company more than once.

(d) For the purposes of clause (c)(ii), any profits of a company, other than relevant profits in relation to a relevant dividend, and any profits of any other company to which they are attributable shall be deemed to be the same profits.]4

(5) The provisions of paragraph 9E shall not apply to any additional foreign credit calculated in accordance with this paragraph.

(6) This paragraph shall not apply to dividends paid in any case where paragraph 9H applies.]1

Amendments

1 Inserted by FA13 s26(1)(f) and applying to dividends paid on or after 1 January 2013

2 Deleted by F(No. 2)A13 s40(1)(a) having effect as respects dividends paid on or after the date of the passing of F(No. 2)A13 – 18 December 2013

3 Substituted by F(No. 2)A13 s40(1)(b) having effect as respects dividends paid on or after the date of the passing of F(No. 2)A13 – 18 December 2013

4 Inserted by F(No. 2)A13 s40(1)(c) having effect as respects dividends paid on or after the date of the passing of F(No. 2)A13 – 18 December 2013

Revenue Guidance

Foreign Dividends – Additional Foreign Tax Credit – eBrief No. 09/15

Case Law

Whether restitutionary claims for tax unlawfully demanded sufficient to provide effective remedy under EC law for recovery of tax unduly levied. Test Claimants in the FII Group Litigation v Revenue and Customs Commissioners - [2012] STC 1362

Whether EU law requiring tax credit for higher of tax actually paid and foreign nominal rate of tax of the dividend paying company capped at the UK corporation tax rate, or credit for the actual tax rate paid capped at the UK corporation tax rate. Prudential Assurance Co Ltd v R&CC – [2016] EWCA Civ 376

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Sections referred to in text

section 21 [The charge to corporation tax and exclusion of income tax and capital gains tax]

section 21A [Higher rate of corporation tax]

section 21B [Tax treatment of certain dividends]

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

[PART 3

Miscellaneous

[10.

Credit shall not be allowed]1 under the arrangements against the Irish taxes chargeable in respect of any income of any person if the person in question elects that credit shall not be allowed in respect of that income.

Amendments

1 Substituted by FA98 s60

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

11.

Where under the arrangements relief may be given either in the State or in the territory in relation to which the arrangements are made in respect of any income, and it appears that the assessment to income tax or to corporation tax made in respect of the income is not made in respect of the full amount of that income or is incorrect having regard to the credit, if any, which is to be given under the arrangements, [that assessment may be amended to ensure that the total amount of the income is assessed and the proper credit, if any, is given in respect of that income, and where the income is entrusted to any person in the State for payment, an assessment to income tax may be made or amended on the recipient of the income under Case IV of Schedule D.]1

Amendments

1 Substituted by FA12 s129 and Sch4 Pt2(g) – see note below. Previously “any such additional assessments may be made as are necessary to ensure that the total amount of the income is assessed and the proper credit, if any, is given in respect of that income, and where the income is entrusted to any person in the State for payment, any such additional assessment to income tax may be made on the recipient of the income under Case IV of Schedule D.”

Note to FA12 Amendment

The amendment is subject to s129(3)-(5) which cannot be consolidated:

(3) Subject to subsections (4) and (5), this section takes effect on and from 1 January 2013.

(4) This section applies—

(a) in the case of a chargeable period (within the meaning of section 321(2) of the Taxes Consolidation Act 1997) which is an accounting period of a company, as respects chargeable periods that start on or after 1 January 2013, and

(b) in a case other than that referred to in paragraph (a), as respects the year of assessment 2013 and subsequent years of assessment.

(5) This section does not affect the application of the provisions of the Taxes Consolidation Act 1997, which are amended or deleted by this section, as respects chargeable periods prior to those referred to in subsection (4).

Irish Tax Review Articles

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Cross reference

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

12.

(1) In this paragraph -

the relevant year of assessment”, in relation to credit for foreign tax in respect of any income, means the year of assessment for which that income is to be charged to income tax or would be so charged if any income tax were chargeable in respect of that income;

the relevant accounting period”, in relation to credit for foreign tax in respect of any income, means the accounting period for which that income is to be charged to corporation tax or would be so charged if any corporation tax were chargeable in respect of that income.

(2) Subject to paragraph 13, any claim for an allowance by means of credit for foreign tax in respect of any income shall be made in writing to the inspector not later than 6 years from the end of the relevant year of assessment or the relevant accounting period, as the case may be, [a person aggrieved by a decision of the inspector in relation to a claim made by that person may appeal the decision to the Appeal Commissioners, in accordance with section 949I, within the period of 30 days after the date of the notice of that decision]1.

13.

Where the amount of any credit given under the arrangements is rendered excessive or insufficient by reason of any adjustment of the amount of any tax payable either in the State or in the territory in relation to which the arrangements are made, nothing in the Tax Acts limiting the time for the making of assessments or claims for relief shall apply to any assessment or claim to which the adjustment gives rise, being an assessment or claim made not later than 6 years from the time when all such assessments, adjustments and other determinations have been made, as are material in determining whether any, and if so what, credit is to be given.

[14.

The provisions of this Schedule shall apply for income levy as they apply for universal social charge with any necessary modifications.]2

Amendments

1 Substituted by F(TA)A15 s41(11) and coming into operation on such day or days as the Minister for Finance may appoint by order or orders either generally or with reference to any particular purpose or provision and different days may be so appointed for different purposes or provisions. S.I.110 of 2016 appointed 21 March 2016 as the date of coming into operation

2 Inserted by FA13 s26(1)(g) and having effect as if it had come into operation for the years of assessment (within the meaning of section 2 of the Taxes Consolidation Act 1997) 2009 and 2010

Case Law

Whether not allowing tax credits in respect of losses brought forward was discriminatory under double tax agreement – UBS AG v Revenue & Customs Commissioners [2007] STC 588

Belgian resident taxpayers were not entitled under Belgian law to tax credit in respect of tax deducted at source in France on dividends - whether this constituted a restriction on free movement of capital – Kerckhaert & Morres v Belgian State C-513/04

Oral agreement for sharing profits with branch not eligible for double tax relief. Training Consultant v Revenue & Customs Commissioner - [2007] SpC 584

Double tax relief on while or separate profits. Legal & General Assurance Society Ltd. v Revenue & Customs Commissioners - [2006] STC 1763

Revenue Guidance

DTR Method of computation - TB13 January 1994 2.5

DTR Foreign effective tax rates - TB15 July 1994 7.2

Foreign effective rates (with effect from 1 January 2007) - TB67, November 2007

Irish Tax Review Articles

Ireland as a Location for Investment. Robert Lohan, Irish Tax Review, September, 2002

Considers credit for overseas tax, dividend withholding tax and distribution issues post-FA 2001 and 2002.

Double Taxation Credit Relief for Traders in the Aftermath of Legal and General. Dearbhla Mongan, Irish Tax Review, November 2006

Foreign Tax Revisited – Recap and Update on Recent Changes. Peter Vale and Sarah Meredith, Irish Tax Review, June, 2010

Individuals – the Application of Foreign Tax Credits for 2012 Compliance Purposes. Sandra Chambers, Irish Tax Review, Issue 3, 2012

Sections referred to in text

section 9 [Subsidiaries]

section 21 [The charge to corporation tax and exclusion of income tax and capital gains tax]

section 21A [Higher rate of corporation tax]

section 26 [General scheme of corporation tax]

section 243A [Restriction of relevant charges on income]

section 411 [Surrender of relief between members of groups and consortia]

section 413 [Profits or assets available for distribution]

section 414 [Meaning of “the profit distribution”]

section 415 [Meaning of “the notional winding up”]

section 418 [Beneficial percentage]

section 442 [Interpretation (Part 14)]

section 448 [Relief from corporation tax]

section 449 [Credit for foreign tax not otherwise credited]

section 450 [Double taxation relief]

section 644 [Provisions supplementary to section 643]

section 644B [Relief from corporation tax in respect of income from dealing in residential development land]

section 713 [Investment income reserved for policyholders]

section 723 [Special investment policies]

section 738 [Undertakings for collective investment]

section 826 [Agreements for relief from double taxation]

section 830 [Relief to certain companies liable to foreign tax]

section 831 [Implementation of Council Directive No. 90/435/EEC concerning the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States]

section 833 [Convention with United States of America]

section 949I [Notice of appeal]

section 951 [Obligation to make a return]

Cross references

29A Temporary non-residents

129A Dividends paid out of foreign profits

247 Relief to companies on loans applied in acquiring interest in other companies

450 Double taxation relief

485G Miscellaneous (Chapter 2A – Limitation on amount of certain reliefs used by certain high income individuals)

697M Exclusion of reliefs, deductions and set-offs

826 Agreements for relief from double taxation

827 Application to corporation tax of arrangements made in relation to corporation profits tax under old law

828 Capital gains tax: double taxation relief

829 Treatment for double taxation relief purposes of foreign tax incentive reliefs

830 Relief to certain companies liable to foreign tax

831 Implementation of Council Directive No. 90/435/EEC concerning the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States